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tv   Fast Money  CNBC  October 25, 2012 5:00pm-6:00pm EDT

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26 points, nasdaq composite of 4 1/2, and the s&p 500 up 4 1/4. we wanted to bring you the latest on apple. my observation returns tomorrow. thank you so much for joining us on "the closing bell." hope you'll follow me on twitter and google plus. have a great night. see you tomorrow. but wait. "fast money" begins now. live from the market site in new york city's times square, i'm melissa lee. our traders are standing by ready to break down all the moves. cnbc's jon fortt courtney reagan will bring you all the latest developments. but right now let's kick it off with apple, the stock recovering off the post-market session lows. but it is still trading lower at this point. big disappointments, particularly when it comes to the forecasts for the fiscal first quarter. >> that's what struck me. it was the guidance for the next quarter. i mean, the street was looking for i think $15.75. they came in with an 11 handle. and revenues were light as well. they're historically a bit of a sandbagger and maybe the
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reaction to that in the after-market is because the stock is down about 100 bucks since that 7 handle we traded a couple months ago and maybe this has been the anticipation to sort of sell the rumor, buy the news. to me there still should be a little push on the down side, but if this stock goes positive and opens up tomorrow that's an excellent sign for those that are trying to pick a bottom in aapl. >> when i first heard the forecast also for the current quarter that we're in right now, karen, i also thought sandbag immediately because analysts' estimates were so high for the third quarter, calendar third quarter, that it just reported and maybe it's just trying to guide the analysts down a little bit. >> i think, and guy said, it they are serial sandbaggers. all we know is that that next quarter will not be 11.37 or whatever they said. we have no idea what it will be but we know it won't be that because that's what they told us tlt be. it's astounding to me that the market got it right exactly within a buck of where it closed which is sort of astounding to me. that does seem to be a buy the
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rumor sell the news. we'll hear more of course as the call gets going but i don't know what to make of it right now. >> the last time around. that's got to stand in the way if you want to be really bearish on this, on the action. so i think you have a wait and see approach. maybe the broader market will dictate what it does instead of vice versa which is usually the case. but you look, if it dips below 600 this thing moves down another $14. >> context karen was talking about in terms of the market calling it right, we saw a 12% decline from the peaks above $700 earlier last month or -- actually, earlier in october. mike cho, people were buying puts but not necessarily in apple in anticipation of the earnings. >> that's right. it's an interesting. a colleague of mine john coleman was talking about it. felt like the options were a little pricey but knew because it's such a big component component of the triple qs that maybe a good way to make the bet would be to buy puts there. and i think that was a pretty smart play. to me another great point he made was who's the incremental buyer here? everybody's pretty fully vested.
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and also we kind of expects the numbers wouldn't than good because of the release of the new phone but if their guidance is weak going forward then you have to wonder about the iphone 5 sales, whether they're really good as everybody thinks they will be. >> let's get more on the apple story, bring in the analyst who was the first to do ipad math this week and predict a miss. he got it right. we're talking about colin gillis of bgc partners joins us now on the fast line. colin, in terms of -- you called it right but in terms of the forecast for the fiscal first quarter, was it something that you expected? >> the forecast was definitely weaker than we were all expecting. the september quarter, that's the refresh quarter. the miss is not a big surprise but it's also worth recalling that apple has disappointed in three of the last five quarters. stock is not expensive. we can see why people want to buy the dip. but there are a few cracks to worry about. we've got margin pressure. the possibility of a vacuum refresh in the next six months. the company still has competition in the low end that it's choosing not to serve.
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>> in terms of the margin pressure, are you talking mostly about the ipad mini? do we know enough about what's inside it to believe that there will be pressure on those margins or that those margins will be lower than the ipad itself? >> sure. and the teardowns do indicate that. plus with the iphone 5 it is a bit more expensive. so there will be a little bit of margin pressure that comes in from that regard. the other thing i would highlight is if you want to see what iphone sales would look like if they were unsubsidized, if people had to pay the full ride, you want to look at what's gone on in the ipad marketplace, right? so sales are coming in a little lighter than expected. the margin potential is a little bit less because competitors have one lever against apple and that's price. >> apple's clearly got the cool factor. everybody wants their products. but a lot of other folks are coming out with similar products. i won't say as good. is there a concern at some point that apple products become ubiquitous and you sort of forget about the ecosystem everybody talks about and apple just becomes sony from 1984?
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>> i mean, you know, look, apple serves -- apple's very good about staying true to its niche, which is a high-end marketplace. and we've always said that they may have trouble getting scale and retaining those margins. because if you're selling something for a dollar and you're making 50 cents profit on it, someone else is going to come along and say hey, i'll sell it for 55 cents, only make a nickel. it may not be as good, but you're going to get a slice of the market. and that's what's happening on the margin. you see amazon getting a decent amount of traction with kindle. and you see google chasing into the market as well. >> it's karen. let me ask you something, colin. do you think that for the apple story to regain momentum we need to see just a complete new product like a tv? i don't think radio would be the answer. but something like that to get the stock going again? >> yeah. you know, that's the key question there, karen, and i think that the tv product, if it comes in the spring, may not actually even be enough to get the stock going again because turnover in televisions it's a much longer slower sale cycle.
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people buy a tv every ten years, a pc four or five, a new phone every two. so when they move -- if and when they move to capture that third screen, would that be enough to push it up to a trillion dollars? i don't think so. >> colin, who are you r. they make the ipad mini for? tough an ipad and an iphone you're probably not buying the ipad mini. also, are they competing not only with kindle fire? are they competing with samsung galaxy note 2? what are they really competing with here, and is it a necessary product? >> yeah, that's another great question because it does seem that the product lines are getting a little bit more confusing and the price points are starting to slur into each other a little bit more. an ipad mini, most of us thought it would come at that 229, 249 price point to nip the momentum of a kindle fire, you know, nip the momentum of what google wants to do with their tablet hardware. instead it's kind of bunched up pretty close to what you could get an ipad 2 for.
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and the distinctions between two are smaller. >> what are the chances of apple regaining its record levels at above $700 a share? >> look, this is a holiday quarter and what's most likely going to happen in the december quarter is do a good job of filling channel inventory. if you're going to have a strong quarter this is the quarter to do that. most people have that built into their models. numbers are likely to come down. so i think a holt recommendation on this name is a good strategy. we know people who are selling puts if they want to get into it to capture that premium. buying cost threads. because they think that the momentum may be slowing down. it could be rangebound. >> colin, good to speak with you. colin gillis of bgc partners. as you saw there, apple shares down a little more than a percent in the after-hours session. not so bad when you take a look at the numbers. processing the take, we really thought it could be a disaster. we saw the impact initially on the nasdaq 100. sharp decline there. and as we have apple now open for trade you've got to wonder what the picture on the qs are
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and what this means for technology overall, which has been in large part a disappointment in terms of the quarterly earnings we've seen so far. >> let's talk about the s&p. steve has been talking about it. take a look at today's action in the s&p. we traded back up at a certain point today early to that 1,421 level. we've been sort of talking about 1,425 for a long time. if you have a chart, you can see what we're talking about. what was resistance becomes support, what was support becomes resistance. resistance we found it in the form of 1421, but i think that 25 level. i think with amazon, we'll talk about that in a little while. with apple -- i think 1379 is very realistic in terms of a down side level in the s&p. >> let's go to jon fortt. he's been on the conference call. >> a lot of boilerplate here but a couple things interesting for people who are wondering about the rollout of new products and how that might have contributed to these numbers. apple said that they ended the quarter with three to four weeks of mac inventory below the
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target. that makes sense because they just rolled out new macs. also they ended the quarter below the target inventory of four to six weeks in iphones. no surprise there. they just rolled out new iphones. also, as to why some people might be feeling a little bit better about this story than they did when the numbers first came out, one independent apple tracker who i got an e-mail from pointed out that the revenue level that apple targeted for the next quarter, this is coming from andy zacky, the $52 billion number, that suggests they expect to sell quite a few iphones. i thinks more than 50 million of them, though i haven't done any of that math myself. but some people see the overall revenue number that apple seems to be promising for the holiday quarter as positive, expect that eps might be better than they're putting out there, maybe because they don't know what will happen in terms of mix of ipods and ipad minutis. there's a positive side.
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we'll see what they have to say on the call. >> thanks a lot. we'll get an update from you a little bit later on. it's interesting how willing -- wall street is willing to sort of look through this quarter. brian marshall came out with a quick takeaway after the numbers were released and he said it looks like a decent quarter, it looks like a decent quarter overall despite the miss. and jon baer said some are saying despite the 52 billion not bad. >> not so bad. it's way less of a miss compared to that earnings number that they put out, the 1175 versus the 15 and change for the street. >> is it a sandbag the way they usually do or -- because if they come in, anything with an 11 handle i think next quarter, then all of a sudden it's sort of -- all bets are off. then you have to reevaluate. i happen to think it's a sandbag. we'll see. and i think the stock action's going to tell you tomorrow's going to be a fascinating day. maybe it opens down eight bucks, closes higher. we'll see. >> let's take a look at shares of pandora plunging today on a report that apple is planning to compete with the radio service of its own. julia boorstin's got more on this story.
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julia. >> hi, melissa. i've been talking to various sources in the music industry. from what i understand, apple is continuing its talks with the music label to create a free ad-supported streaming service. michael was just telling me that the talks were ongoing. i reported on this stock in september. and they aren't far enough along for the service necessarily to launch in january. it sounds from my sources like the deals will probably be signed sometime in december before the holidays and that the service would probably launch no earlier than february. one source telling me that apple is looking to launch the streaming music service around the grammys in the first half of february, which would make sense. now, my sources are telling me that this would be a tree ad-supported service that apple would use as a way of driving people to buy music sales. because they're negotiating these individual deals, the service would actually be more similar to a spotify than a pandora. pa pandora is this traditional internet radio service, which means they have set fees, but apple would be negotiating these
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fees directly with each of the labels and they would be giving a small licensing fee up front per song and then also doing an advertising revenue share. now, from what i understand, some of the labels are concerned that apple does not have an ad sales team dedicated to this in place already and doesn't necessarily have the best track record when it comes to advertising. iad was not the big hit they hoped it would be. >> julia, just quickly, we're taking a look at the chart of pandora in the after-hours session, moving higher, up about 3% at this point. what is your interpretation of this move higher? is it because as you mentioned it's not going to be a real direct competitor to the apple service with pandora, so there's some relief built in? what's your take on this? >> well, melissa, i think that any free music service is competition for pandora. but it does sound like this is not a traditional internet radio service the way pandora and mod are traditional internet radio services. those internet radio services have set fees set by the
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government, a certain number of times per hour they can play songs. this is really going to be much more of an on-demand service. i also think the fact is that we know apple's been working on this for months and it's just a question of when apple's going to launch this. back in september i think pandora's stock plummeted 17% when the news story came out that apple was going to launch a service like this. it's no surprise pandora dropped on the news but maybe the market is realizing this has been in the works for a while. >> got it. julia, thanks for that. grasso? >> well, she nailed, it right? pandora did come in the first time we got wind of maybe some competition coming from apple. but then what marked it higher was the internet fairness act that everyone thinks will be passed or hopes will be passed and that could double the value of pandora. that's a huge question mark. so before we worry about competition, maybe think about that mitigating some of the damage as well. >> got to take a break but stay with us because we will continue to bring you all the latest in the movers after hours, including amazon, apple, and
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coinstar in the after-hours session. later in the hour you'll hear chuck jeannes join us to break down the company's third quarter results. >> "fast money" isn't just about a bull market. it could be going up, down, or sideways. zbluf got to be able to surround the trade. >> we're all doing what we do for a living and we're all together as a team but we all come at it from a different perspective. >> it's all about moving the odds into your favor. >> it's really what drives up the value of the show. >> i am jon najarian. i am "fast money." >> i am stephanie link. i am "fast money." >> i am steve grasso. i am "fast money." your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120.
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. take a look at shares of amazon. lower after hours but well off the session lows. let's bring in aaron kessler of raymond james to break down the report. aaron, why do you think there was such a bounce in the stock? at its lows the stock was down about 7%. >> yeah. look at the gap eps. they had a loss of 60 cents. we were basically at break even, although there was a big one-time charge in that for a living social writedown. if you actually look at the non-gaap operating income numbers, that was about $232 million. and that was actually above the
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high end guidance range of 225 million. so i think it was a knee-jerk reaction to the negative gaap earnings but when you actually look through the numbers the numbers are actually basically a little better than expected on the earnings side. >> right now the fourth quarter, the last quarter of the year, typically a strong one for a company like amazon, and if you see a 1% decline you might want to say it's a buying opportunity but maybe not for a stock at this valuation. where do you stand on that? >> yeah. we like the fundamentals and we like the long-term prospects for amazon but you're still trading at roughly 60 times a non-gaap earnings number on 2013 and versus kind of a 30% long-term growth rate that's still a pretty healthy multiple in our view. >> hey, aaron, what about marge sninz i know they had a lot of head count increase this quarter. is that something that concerns you going forward. >> >> yeah, they're still in heavy investment mode, especially internationally. they just referenced international investment in italy, spain, china, as well as video content international. so if you're looking at the domestic margins you're seeing
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the margins expand domestically but they're pouring a lot of that back into international. so i think that's the issue you're seeing right now even though you're seeing close to 4% domestic. operating margins, internationals basically at negative at this point. >> all right, aaron, going to leave it there. thanks for your time. aaron kessler. i'm glad, brian, that you chimed in, but what's your thoughts on amazon? you're so quiet for the entire show. >> i've been a little quiet, yeah, for the first part of the show there. listen, amazon, the story with amazon obviously the high valuati valuation, but they're always pouring into money the next new products. so that's why i asked the question, i know people were concerned about that head count increase. so that story again. google went through this phase as well and they seemed to come out all right. so i think amazon around these levels, we'll see how it opens tomorrow might be something we want to get into. >> you thought beak was in a time out. >> typically he chimes in right off the bat. rendered mute. >> listen, i was like a spider sitting in my web, waiting to come by. >> in traffic, by the way. he's here now.
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nothing to look at here. move on. let's get back to the most highly anticipated earnings release of the quarter, and that is apple shares breaking below $600 after a big miss in the after hours session. larry haberty manages the multimillion-dollar trust which owns 50,000 shares of the tech giant. always good to have zblup hi, melissa. >> in terms of the weakness you've seen in the after-hours session, are you surprised that apple is guiding lower for the current quarter? >> well, i really don't care where they're guiding, melissa. i think what i care about -- >> really? >> -- is the cash they're generating. if you take the last 12 months, they generated $40 billion of cash. in this quarter on their incremental revenue they converted 37% of it to ebidta. amazon on the quarter converted 3% of their incremental revenue. if i pay bamzon i'm paying $5 per dollar of cash flow times what i'm paying for apple. and the earnings miss, if you look at the statement carefully, which heaven forbid, nobody has
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done that i've been listening to. the earnings miss was a function of the interest income turning to interest expense because of some charges. so actually, here's a company that's reporting interest expense with $122 billion of net cash. >> hey, larry, if you you want to say it was us, you can say it was us because the only thing you've been listening to has probably been us. which is fine. but we talked about their guidance, which is an atrocity. we didn't even bring up the earnings miss. so if you want to address that, that's fine. but don't sort of talk around -- i mean, just if you've got a problem with us just say i've got a problem with you guys. don't say what you've been listening to. >> i just -- i just think the deal here is that you look -- you're an owner of a business. and the reason you own a business is you want it to generate cash. and if you look at this business, it produces machines but it also has a -- probably the best retail business in the world and it collects tolls as these machines proliferate, people write apps for them.
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so you have three sources of income, and it's a phenomenal proposition. and i think -- and i look at the stock at 7.8 times trailing cash flow, and it's a lower multiple than almost any consumer product company i follow, mcdonald's, procter & gamble and coca-cola. and it lives in the tech world but it has the best consumer brand. it has tremendous power among the consumers. now, it i think needs to run its balance sheet -- >> larry -- larry, let me jump in. it's the other sicilian on the desk but i'll be a little bit nicer. the problem, though, is with the iphone. where are we on the bubble here? i have the iphone 5. i'm not impressed. i probably won't buy another iphone going forward, i'll miss two cycles. i'll probably do something else. now, just jump back two things. amazon, at what point did you like it if ever? because it traded up $100. so you could have said valuation was a problem $100 and been wrong. >> oh, absolutely.
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i have not ever understood how the market gives jeff bezos a hall pass and enables him not to generate what i would call conventional economic profits. but in the apple situation i think the demonstration really is what goes on in the stores. i stood outside the store in fifth avenue a week after the iphone 5 was introduced. they had a sign that said you couldn't buy it, the store was absolutely packed. i think there's tremendous pent-up demand for the product. and i think the thing that's going to happen here is the people who write stuff that you're going to be able to do on the iphone 5 are going to write it and that's going to stimulate more demand. so i think you've got this tremendous virtuous circle in the development area, and i think you're not really paying a tremendous amount for it because you're buying it right now at eight times cash flow.
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you're paying 30 times cash flow for amazon. i just don't understand that. and you look at eight times cash flow, it's like the guy running away from the bear in the woods. he only has to run faster than his friend. at this point apple, it doesn't really have to run too fast. all it has to do is run faster than mcdonald's and procter & gamble and i think it's going to be a marvelous investment. and if they ever decide to buy stock with that $122 billion, it's a 14% pretax return. the stock -- i don't know how high it can go. but the direction is up. i think -- i don't know how many of these phones they're going to produce or market but i love the stock at 7 1/2 times cash flow. >> i love the metaphor, larry. a bear in the woods. always good to have you, larry. great to see you. larry haberty of the gabelli multimedia fund. >> people getting mad at me because i was -- i wasn't rude. what we said was their guidance was lousy. we didn't make any reference to
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missing the quarter, at least while i was sitting here, and it's been the last 24 minutes. so i understand what he's saying. but i mean, to the point, their guidance for the next quarter was an abomination. that's all we said. >> at least it wasn't while b.k. was sitting here. >> yeah, you didn't hear anything. >> no, but he makes a good point in terms of the cash generation, karen. as long as they're generating this amount of cash, they have some leeway here. >> he was going to get to the point of capital allocation, which we all know has been horrific here. tremendously accretive for them to buy back stock. that would be the most accretive thing to do by a lot. dividend isn't accretive but it would be cash back to shareholders. i hope they do that but i'm not optimistic that we'll see a materially different capital allocation strategy. >> all right. well, coming up next we continue to bring you all the after-hours action. and later, microsoft pioneer who launched windows 95 will give us his take on the latest windows version to hit the shelves. stick around and find out if microsoft has finally found the game changer it has been looking for. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong.
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i am jon fortt on the apple earnings call. got some headlines. important particularly on margins. a couple things apple pointed
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out about why margins are going to take a bit more you have a hit than usual. eps more of a hit than usual in the december quarter. first of all, 80% of december quarter revenue is going to come from new or repriced product. there's 13 weeks in the quarter as opposed to 14 a year ago. and then mairnlgz on new products lower than their predecesso predecessors. lowered price of the iphone 4s and 4 is hitting them in margins. their transitionary costs in these products. sometimes that means putting products on planes instead of putting them on boats because you're trying to get them in customers' hands as quickly as possible. greater deferred revenue with some of these products ramping now. and some of the favorable items that benefited gross margins in september won't carry over in december. i'm not sure exactly what that means because they didn't point it out but it could have to do with component costs. analysts are continuing to ask questions. >> when comes to apple's chart you might have missed it but apple did go into positive territory for just a few
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seconds. but this really speaks, grasso, to maybe the point that technical analysts are making that the stock appeared to be week but maybe now this price action will tell a different story. maybe this is the turning point here. >> here's the thing. you have to really look back what technicians do, they're looking at all the same levels, but they mean different things of course to all the different people. but they're looking at the action that came out of earnings' last cycle. if you're looking just at that, not on a fundamental basis you're probably not going to sell the stock first blush. you're going to wait for that pop to peter out. and if it's not as big as the pop from the last earnings people are going to lay into this, especially if the macro market is weak. >> tomorrow's going to be a real tell. >> tomorrow's the real tell. for the next two days or so. >> want to go quickly back to jon fortt. jon? >> yeah, there are a couple of things that they said around the time when the stock turned positive that i wanted to let you know about. pe had to do with the iphone. looking through my notes here. tim cook said we are still in a significant state of backlog with the iphone 5 but output
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improves significantly over the last month of the quarter. he also said he didn't know when supply and demand would be in balance for the iphone 5 but "i'm feeling very confident in our ability to supply quite a few iphones." that is very important for this quarter. he said he still anticipates rolling out to 100 countries by the end of the year. that unprecedented huge rollout. and he said he didn't see costs accelerating on a per-unit basis during the quarter. so it doesn't look like this margin issue necessarily going to get worse during the quarter. back to you. >> all right, jon, thanks for that. you were saying, grasso? >> i'm not -- first of all, just go back to one thing. i'm not impressed. people that have the iphone 5 -- you don't have it yet, right? >> no. >> i could have waited. i have the 4. i skipped the 4s. everyone that i spoke with said they would have passed the phone up. they said it's just not worth the upgrade to the phone. right now i'm also getting the
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samsung galaxy note. i'm more excited about that product right now than i am about the apple for the first time. >> i think the probably you have with apple here is that the product cycle that apple has had, they just came out with a ton of new products. so what's left for people to get excited about? we may get a pop in the stock as people hope for christmas sales and the ramping of these new products. but then after that i'm not sure there's much left. so if we do get a sustained rally over the next couple weeks it might be time to get out of this name. >> let's hit a market flash. back at headquarters watching shares of coinstar. seema. >> coinstar missed street expectations on its top and bottom line. the street was calling for an eps of $1.15. the company reporting $1.14. so it missed by a penny. the summer olympics was cited as a temporary headwind and one of the reasons for the weaker performance this quarter. perhaps more people watching the olympics versus renting movies this summer. the stock down better than 6% after hours. back to you. >> all right. thanks a lot for that update.
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coming up next, the boss of goldcorp goes on the record about his company's third quarter results and a curious market mystery. stick around because chuck jeannes is up after this.
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welcome back to "fast." live at the nasdaq marketsite. another after hours mover. expedia jumping 14%. it was a beat on the third quarter. eps is well above the guidance and consensus. revenue growth also above street estimates. and the thing here is there were a lot of lowered expectations because priceline showed such weakness out of europe that this was an upside surprise here. >> that's exactly right. i think people got caught trading on the wrong foot. so that's why you're seeing the surge. a lot of people short ahead of it. i've got to look at the valuation on this one but my sense is this is going to be one of the opportunities if you're not in it now to try to put on a short position way tight stop. >> shares of goldcorp rising more than 6% in today's session. the mining company's third quarter results beating the street on both the top and the bottom lines. but the miners have been lagging gold's performance over the past few years. here to discuss both earnings and what is behind mining's disconnect with gold pricesize goldcorp ceo chuck jeannes.
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and chuck, this is a real quandary for a lot of traders that have always pointed to this historical correlation, the gold miners should do better in an environment where gold prices are rising. why do you think there has become this disconnect? >> well, there has been a quandary and it's gone on for a couple of years. and i think there's a variety of reasons. the simplest, though, is it was much easier to put some optionality value in the equities when gold was trading at $300 or $400 or $500 than it is when gold's trading at $1,700. it's just the up side from where we are today is not quite as easy to see. as it was back then. so that value has come out of the stocks. the second point, of course, is 10, 15 years ago if you wanted exposure to gold you really had no choice but to buy physical gold or the gold equities. now you've got etfs. so that has taken some of the demand for the stocks. but i think one of the key issues is that we've now seen
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this turn around. in the last 90 days goldcorp is up 25% versus the gold price itself up about 5%. hopefully we're seeing a turnaround in that trend. >> we had steve forbes on last night. he danced around the possibility of a gold standard. and i'd probably put that at maybe 10% maybe, but do you even model for that at the company in terms of potential hedging strategies going forward or is that something you don't even think about? >> well, i certainly think about it and i listen to the discussion and the debate. i would likewise put it at a pretty low probability. so it's not something at the company that we are taking any action with respect to -- certainly it would be extremely positive for gold. but the likelihood is probably pretty slim. >> it's karen. let me ask you, is there ever a big enough disconnect that would make you short the etf to buy your own stock? just a giant arbitrage.
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>> that's something i never thought about. no. i think, you know, we -- our business and our focus is on producing ounces as efficiently as we can, meeting our numbers, maintaining our low cash cost, building new mines, and over time we've generated quite a bit of value for shareholders doing that. the market will do what it's going to do. and over time it can get out of sync. but like i said, hopefully we're seeing that come back right now. >> you know, bears when it comes to the mining stocks versus the metal, chuck, will point out that it is perhaps more and more expensive, especially when it comes to labor costs, to get it out of the ground, so therefore the metal itself is a better buy as opposed to dealing with the political risk and the increasing cost to actually produce the metal. what can you tell us about the rising costs to just produce it and whether or not the strikes in south africa that have paralyzed much of the mining industry there, how that will affect your costs.
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>> well, certainly we're all very saddened by the violence and the other issues that have taken place in south africa. we don't operate there. but our friends do. and we're paying close attention to it. i think there's two sides to this, of course. if it's harder to get an ounce of gold out of the ground, then there's going to be less supply and that ultimately will be better for the price of our product. the other side, of course, is from a purely financial perspective the higher -- the more it costs the more leverage we have to increases in the gold price. and that's historically been the advantage of owning an equity. and it hasn't really played true for the last couple years and like i said, hopefully we're seeing that turn around now. >> chuck, great to speak with you. thanks for your time. >> thanks for having me on. >> chuck jeannes of goldcorp. mike kuo, what are you seeing in terms of traders favoring either the metal or the miners? >> well, you know, it's interesting, the miners -- we've seen a lot during this earnings
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season of bearish activity in the options market but the miners have actually seen on balance bullish activities. if you take a look across all of the precious metal mining stocks about 87,000 calls traded versus about 67,000 puts. that's actually relatively bullish. i think some people also making bullish bets in gdx, which is the gold miner etf. i think vol still high and gdx could move a little lower. i would be inclined to use probably call spread risk reversal, basically selling some down side out of the money puts, maybe buying some call spreads with the proceeds. >> coming up next, it is a look at the new windows 8 system from a man who's known as a microsoft trailblazer. brad silverberg of ignition partners built the microsoft franchise. he'll reveal what is at stake for the company right now, right after this break.
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windows 8 tablet. windows 8 gives you pcs. you can have both. no compromises. windows 8 is for work and play. windows 8's all about you. >> looks like he just eclipsed jeff bezos's laugh. that was just totally -- >> that of course microsoft ceo steve ballmer on the company's recently unveiled windows 8 operating system. so just how high are the stakes
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for microsoft? joining us on the fast line is brad silverberg, founding partner of ignition partners and a former senior vice president at microsoft. brad, i assume since you built the windows franchise and launched windows 95, developed internet explorer versions 1.4, that you have actually test driven this. what does this mean for microsoft in your view? >> i think -- thank you, first of all, for having me on the program. i very much appreciate it. today is a very, very exciting day for microsoft. it's really a new beginning. windows 8 and the windows rt surface products are the biggest, most important launch for microsoft since windows 95. and i think it shows just how much the world has changed over the last couple years. it's a bold, creative, exciting, innovative product. one of the most innovative products microsoft has ever done. but at the same time one of the
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riskiest. and so i think microsoft has hit a fork in the road and it's going to be very interesting to see how windows 8 and the surface product are received and how well they do in the market. >> i think a lot of people would agree with you in that this is the most daring and innovative product for microsoft. the problem is that a lot of people would say that this day should have come a couple of years ago and that this new beginning should have been launched at a time when tablets were on the cusp of becoming standard fare here for consumers. do you concede that perhaps microsoft, even though this is an innovative product, that perhaps this comes a little bit late for the company? >> it's a very risky product for the company right now. there's no doubt that tablets and smartphones and touch and voice, they're the future. and standard windows desktop, that's the legacy. and in the most exciting, fastest-growing space in all of technology microsoft has been
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m.i.a. >> hey, brad, it's brian kelly. so the biggest knock on microsoft obviously has been execution. and so what has changed at the company besides this new product that's going to allow them to execute and take on an apple and take on the android ecosystem? >> well, i think they have great executives in charge right now with steve, steven sanofsky. he is one of the best executers in the entire world on any product. he'd be the person that i would want in charge of a product like this. he has done an amazing job of transfo transforming the internal execution of microsoft. so he'd be a guy i'd bet on for sure. >> brad, just to follow up to b.k.'s question, it's all about apps when you buy these tablets. you know, you pass them to your kids. you use them when you're on vacation. but a lot of the stuff revolves around apps. and it seems to me that out of the box they're not going to be competitive there. although this is the best-looking product i've seen from microsoft. >> you raise a great point
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there. it is a beautiful product. it's super well designed. the question is apps. and creating an app ecosystem is a really, really hard thing. i know what it took to do it for windows the first time around. it was extraordinarily difficult. but if you can be successful, the rewards are enormous. the same thing happened with apple. when they first introduced the iphone, if you remember, there weren't apps. it was only web-based applications. and then they went to the app model. and once they did that, it took off. but now the apps that exist for the iphone and the ipad are at incredible competitive advantage for apple. and that's going to be the huge challenge for microsoft. people are not writing very many windows, traditional windows applications anymore. they're only writing web applications. and now you're asking people to write a new generation of
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windows applications that are unlike anything else ever written before. and how you get that virtuous cycle of apps which lead to users which lead to more apps which lead to more users, how you get that going is really difficult and you're going to see microsoft spend hundreds of millions of dollars to try to prime that pump. >> all right. brad, thanks so much for your insights into windows 8. brad silverberg, the founding partner of ignition partners. and as much as brad might be a bull of microsoft, initially he was bullish, he did concede a lot of the problems a lot of the bears in microsoft will say and that is maybe that microsoft was late to the tablet game, maybe windows 8 isn't as revolutionary as it should be, that the apps are a problem and how do you generate that virtuous cycle that you need to get apps going on this thing. >> all that is true. and even some -- the surface to me was -- i thought it looked great. however, sometimes that doesn't matter. and to your point, maybe they are too late. i own the stock.
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it's been disappointing. he was talking about if they can do this, if they can't. what if -- what if they can't? what if the surface bombs in what's next for microsoft? >> i think people buy these things, as i said, about -- for the apps. and the problem is you're not going to see people start to make these apps that go with windows until they see the sales of this machine. now, obviously this machine right out of the box has been -- had been good but it's sort of the chicken or the egg. and that's the only hesitation i would have with it. >> let's turn the corner here and talk about shares of best buy, also related to perhaps the surface and all these tablets here. dropping almost 10% today after issuing an earnings warning and shaking up its leadership ranks. will the stock drop even further? mike kuo, what are you seeing in the options pits? >> yeah, i think a lot more skepticism is what we're seeing. the jan 14 puts were trading in this thing about $1.25. those are bets that the stock's going to be below 13 bucks, below 12.75 really by january expiration. so they see more trouble ahead for the shares of this stock. >> wow. more trouble ahead. what is interesting too is it
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has a pretty high short interest and there was no bounce. >> this stock closed effectively on the -- i think a dime off the lows of the day on 16 million shares, which to me would typically be some capitulation. but to mike's point it feels like there's another couple days left in this thing to the down side. >> coming up, the biggest pops and drops you may have missed in today's session. ♪ what goes up must [ male announcer ] the markets keep moving. make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futures and forex with in-depth analysis. it's an all-you-can-eat buffet for all things trading. thinkorswim by td ameritrade. it doesn't just deliver news. it's making news. trade commission free for 60 days, plus get up to $600 when you open an account.
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welcome back to "fast money." i'm courtney reagan here at the nasdaq. and the amazon earnings call just ended. amazon of course posting its first quarterly loss since 2003. and on the conference call executives not offering a whole lot of information as far as the number of kindles sold. that's not new. we haven't heard that before. but we were hoping for it. not a lot of information either about sales in europe other than pointing to international and saying that it was up 27% and europe is a major component of that. as far as same-day delivery, when that question was asked, amazon said that because of the economics of it it is very challenging but there are instances where they're getting better at it. they have 19 fulfillment centers this year. one or two more expected soon. melissa? >> courtney reagan, thanks for that. time now for pops and drops and movers you might have missed in today's session.
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kicking off with a pop for p & g up 3%. >> a little positive momentum on the cost cutting. >> big drop for f-5 networks down 11%. >> down almost 12% at one point, came back a little bit but this stock still trading very heavy on an earnings miss. i would stay away from this name. >> drop for a.n., auto nation. down 4%. >> name that's been a monster. eps sort.95 line. revenue slight miss. i still like the name. i think this is going to be an opportunity to get back in it. but i still think another day of down side left to the stock. >> pulte group a drop. >> year to date it's up 178%. another name in the building space. i would think everyone who had a short cover has covered already. i wouldn't be a buyer up at these levels. >> pop for zinga up 12%. mike kuo. >> a buyback here, a slight beat on sales, upgrade. but i think the interesting thing is this exclusive partnership with winn party digital of gibraltar for real money gambling in the uk. that on top of some cost-cutting
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it looks like they are trying to do something there. company's not making any money there but it might be worth a speculative bet to the up side. >> all right. we've got a pop here for the talking whale. >> huh? >> researchers in california have discovered that a beluga whale named knock has taught himself to mimic human speech. we've actually obtained a clip of the talking whale. take a listen. >> . >> you did that with steve grasso. >> that's awesome. >> the dramatic pause, too. >> looks a little -- >> first move tomorrow when we come right back. stay tuned. apple didn't deliver exactly what wall street was expecting. with the slew of new products on the way can it survive the gauntlet that's crushing so many stocks? i'm getting to the core of it all. so stick around tonight because "mad money" is coming up next. ha big tire event?
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time for the final trade. grasso. >> roorr. -- >> and that translates. clf. >> troubling. >> cern. i think it's going to continue to go higher. >> karen. >> town sports. ticker club. report earnings tonight. >> bk. >> that's a hard act to follow. apple talked about

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